Hong Kong’s Securities and Futures Commission has mandated a minimum of 50% insurance coverage for licensed crypto exchanges. This decision aims to boost the protection of customers’ assets.
OSL Exchange has already aligned with this regulation by partnering with Canopius, a Lloyds of London syndicate. Their policy covers an impressive 95% of user assets.
Enhancing Trust in Crypto Exchanges
HashKey Exchange, another licensed platform, recently inked a deal with OneInfinity for an insurance policy that covers up to $400 million in user assets. This coverage could expand to include future server downtime and data backup issues.
Moreover, since opening crypto trading to retail investors, Hong Kong has seen a surge in license applications. Currently, 13 entities are vying for approval. These firms must pass rigorous audits, including traditional financial checks beyond proof-of-reserves.
Despite the relatively low license application fees, Web3 firms invest heavily, sometimes up to $25 million, in their application processes. This investment goes into product development and team-building, especially for traditional financial entities new to crypto.
Hong Kong’s new insurance requirement for crypto exchanges ensures heightened user asset protection and signifies the region’s commitment to establishing a secure and trustworthy cryptocurrency trading environment.
Also Read: Hong Kong Proposes Guidelines for Stablecoin Launch
